South Korea’s anti-trust watchdog has begun probing an architect designing unit of Samsung C&T whether it was a “disguised affiliate” under Samsung Group before it was acquired in 2014, news reports said Tuesday.

Samwoo Architects & Engineers, the nation’s largest architect design and urban planning service provider, has been providing architect services for decades for Samsung’s buildings since its foundation in 1976. Such buildings include Samsung Life Insurance headquarters in central Seoul, Samsung Tower in Seocho-dong in southern Seoul and Leeum, Samsung Museum of Art in Hannam-dong. 

Officials at the Fair Trade Commission said that the watchdog received a report in October from the Solidarity for Economic Reform, a civic group for chaebol reform, which demanded the FTC investigate Samwoo’s suspected role as an illegal affiliate, local daily Hankyoreh said.

FTC officials are reportedly looking into whether Samsung controlled Samwoo Architects & Engineers through stock holdings under borrowed names, the report said.

While the current law mandates conglomerates with more than 5 trillion won ($4.4 billion) in assets to report any change in the stake of their controlling families to the FTC, a disguised affiliate can avoid such regulation.

If chaebol submits a false report on the controlling families’ stock holdings, the FTC can impose up to a 100 million won fine. The FTC can also press charges against the chaebol head.

The FTC’s investigation coincides with President Moon Jae-in’s recent picking of Kim Sang-jo, former director of Solidarity for Economic Reform, as the nominee for the FTC chairman.

Kim had vowed to apply more strict fair trade laws to the four largest chaebol -- Samsung, Hyundai Motor, SK and LG -- if he takes office.

By Kim Yoon-mi (yoonmi@heraldcorp.com)